Kenai is our home and we are optimistic about its future. Since graduation from Kenai Central High School, with the exception of college and military service, Gayle and I have lived, worked and raised our sons here. They now have families and children in Kenai schools. Just like you, we have a strong interest in the quality of life and the economic opportunities in our community.

Why are we optimistic when the headlines five months ago talked about the city's revenue losses and projected budget deficits? Maybe because recently it was announced that the projected $485,000 deficit had already been reduced by $350,000.

Maybe because with the sales taxes Home Depot will generate there will be no deficit. Its easy to remember the FY 2003 budget headlines which also projected deficits, but as of year end June 30, 2003, the general fund operating budget had a surplus. In fact, no general fund operating budget since FY 1997 has had a deficit at year end. The facts and not perceptions are what make us optimistic.

But, what about the city's undesignated fund balance? It is true that the balance in this account has declined from $8.2 million to $5.5 million since FY 1997. A decline of $2.7 million.

But 1.5 million of this was a transfer of funds to the equipment reserve fund. Major equipment is purchased by this fund, and the funds are replaced on an annual basis by the recipient department based on the depreciation schedule of that equipment. The other $1.2 million was leveraged in large part by annual operating budget surpluses into $3.5 million in capital spending. This went to an ice facility, road paving improvements and other city improvement projects.

What about the revenue cuts, are we out of the woods on this issue? No, we are not. Many of the budget cuts that council put in place will remain in place this next year. But if we put capital spending on hold until the economy can support it, we can maintain existing service levels with no increase in taxes.

In fact, based on projected increases in sales taxes for next year, some service cuts, such as dust control, can possibly be restored, and pending employee compensation issues can be addressed. We can continue to have operating budgets without year end deficits.

We must work together on the important issues that face us. Let's promote the community to attract the businesses we need and support the ones we have. Let's work with our school board, community groups and other local governments to get equitable funding for our district.

Let's work with other peninsula governments to have state capital grants restored so we can continue paving and road upgrade projects. Let's join with the borough, other local governments and chambers of commerce to overcome obstacles that prevent Agrium and the LNG plant from securing long-term industrial supplies of natural gas.

These are the issues that we need to work on to ensure the long-term economic stability and quality of life for our community.